World Cup costs SA R37 Billion More
Julian Rademeyer, Beeld (translated)
South Africa's bidding document, which it won, is under lock and key -- probably because the presentation details the frightening errors of the costs from curious eyes.
According to The South Africa 2010 Bid Book which won the bid for South Africa to host the World Cup, which was completed in 2003 and submitted to Fifa - it would have cost South Africa only about R3 billion to host the World Cup.
According to the latest estimates, the true cost has now risen to almost R40 billion - this after Mr. Pravin Gordhan, finance minister, stated in February that the Goverment had spent R33,1 billion on hosting the 2010 World Cup.
In contrast to the astronomical amount that the WB will cost South Africa, Fifa has made a larger profit from this World Cup, than any before it.
FIFA has already reaped in R 25 Billion, simply from the sale of TV and media rights.
FIFA, which is registered in Switzerland as a non-profit organisation, made a profit of $ 196 million (about R1.5 Billion) in 2009, and has assets of more than R 7 Billion.
Reuters reported Fifa's income since the last WB in Germany four years ago to be about R24 billion.
However FIFA pays no taxes on its income in South Africa.
That concession was promised to FIFA by the South African goverment, as one of 17 guarantees.
Other promises required, were that the South African Soccer Federation (SAFA) had to provide FIFA dignitaries with two jets, two limousines, 300 cars, buses and six English-speaking drivers.
The Bid document contains 1,000 pages and dozens of attachments and details every aspect of South Africa's hosting of the World Cup.
It was delivered to Mr. Sepp Blatter, Fifa-president, in September 2003.
Beeld contacted Mr. Rich Mkhondo, spokesperson for FIFA's local organising committee, a year ago, for a copy of the bidding document.
Mkhondo and another FIFA spokesperson stated at the end of last week that they don't know where the document is.
“As far as I know, the document is under lock and key in one of the departments. Call me after the World Cup. That will be quicker and easier,” said Mkhondo.
“The bidding document is somewhere between us and Safa.”
Prof. Richard Tomlinson, one of the auditors of a study by the Human Sciences Research Council (HSRC), titled Development and Dreams -- The Urban Legacy of the 2010 Football World Cup, informed Beeld earlier that the secrecy surrounding the bid document has to do with the numbers and projections therein “which are so incorrect that they have become an embarrassment”.
Beeld did have an opportunity to see the document when it was drawn up, wherein it was estimated that the building and upgrading of stadiums would cost R1.2 Billion.
That cost has risen to over R16 Billion.
Capetown's Greenpoint stadium alone cost R4.51 Billion.
The upgrading of the old FNB stadion in Johannesburg to the current Soccer City would have cost R 200 million, but ended up being R3.3 Billion.
Tomlinson said that by 2005 the document had already become “unavailable” by national and provincial goverment officials, who avoided providing the details within the document.
“There is an atmosphere of fear. If you provide information that is negative towards Fifa, from the local organising committee, then you are fired.”
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SA: Fifa's great SA rip-off
Julian Rademeyer, Chandre Prince and Anna-Maria Lombard,
City Press, 06 June 2010
For the next five weeks get used to Sepp Blatter being your president and Jacob Zuma sitting on the bench as a bit-player whose government is legally bound to perform the international football federation’s every bidding.
Fifa’s grip on South Africa was cemented with 17 key guarantees the government had to agree to in order to host the world’s biggest sporting event.
A senior government official said: “Fifa are a bunch of thugs. Not even the UN expects you to sign away your tax base. These mafiosos do.”
The South African Revenue Service (Sars) has been forced to accede to an extraordinary “tax bubble” around “Fifa-designated sites” which exempts Fifa, its subsidiaries and foreign football associations from paying income tax, customs duties and value-added tax (VAT).
As a consequence South Africa, which has already spent R63 billion, will stand to lose tens or possibly hundreds of millions of rand in potential revenue.
According to a document compiled by Sars, by the end of April R613 million worth of goods had been imported into South Africa for the tournament. Rebates of R118 million were paid out on those imports in line with special tax measures for the World Cup.
The National Treasury says it is unable to provide estimates of the amount of foreign currency brought into and taken out of SA, but said one of the guarantees was “unrestricted import and export”.
Some of Fifa’s commercial affiliates, licensees, host broadcasters, broadcast rights agencies, merchandise partners and service providers will not pay taxes on the profits they make during the World Cup. But VAT will be paid on ticket sales and foreign-based soccer players will be taxed on income they receive for playing in the tournament.
Hospital beds, intensive care units and ambulances have been reserved for Fifa and its foreign visitors.
More than R700 million has been spent readying emergency medical services and numerous state-of-the-art medical centres, ambulances and rescue vehicles which have been kept under lock and key for exclusive use during the 30-day tournament.
Safa has also had to provide Fifa with two private jets, two limousines, 300 cars, half a dozen buses and “chauffeurs who speak fluent English and are thoroughly familiar with the area”.
Fifa has hit paydirt. The money is rolling into its Swiss bank accounts and Fifa secretary-general Jerome Valcke boasted this week that “we have increased our income by 50% since 2006 in Germany to 2010 in South Africa”.
Fifa – a registered “not-for-profit” organisation – has banked a record R25 billion in media and marketing revenues. In March, the Swiss parliament upheld Fifa’s tax-free status in Switzerland.
The World Cup is expected to contribute an additional 0.5% to the country’s gross domestic product.
But Dr Udesh Pillay, the executive director of the Human Sciences Research Council’s Centre for Service Delivery, was recently quoted as saying that the country’s expenditure on the World Cup accounts for 6.4% of the 2010/11 GDP.
Sars spokesperson Adrian Lackay said: “From the perspective of what we spent as a country and from what the country stands to make in terms of revenue and profits it is almost negligible.
“Our approach to the World Cup has been that it was never going to be a revenue-raising exercise.
“Certainly it would be wrong to view the World Cup as a significant contributor in itself.
“The concessions we had to give to Fifa are simply too demanding and overwhelming for us to have material monetary benefits.”
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Fifa's R24bn Cup profit
June 19 2010 at 10:54AM
Fifa expected its provisional income for the 2010 World Cup to be $3.2 billion (R24 billion).
The provisional figure was given in reply to a question at a media briefing at Soccer City in Johannesburg.
Spokesman Nicolas Maingot said the World Cup was the main source of income for Fifa and its revenue from this one would tide it over for the next four years.
He added that 75 percent of its revenue would be invested into football development.
The estimate comes after it was reported that South Africa, which spent about R63 billion on hosting the event, has granted Fifa a number of tax concessions.
A recent report said that the world soccer body would cause the country to lose "tens or possibly hundreds of millions of rands in potential revenue".
It reported that the SA Revenue Service had been forced to agree to a "tax bubble" around Fifa sites, which would exempt the soccer federation from paying value added tax, income tax and customs duties.
South Africa reportedly gave Fifa guarantees including a supportive financial environment by waiving customs duties, taxes and levies on the import and export of goods belonging to the Fifa delegation, its commercial affiliates, broadcast rights holders, media and spectators and the unrestricted import and export of all foreign currencies into and from South Africa.
The guarantees also included ownership of all media, marketing and intellectual property and that Fifa cannot be sued for claims arising from the staging of the tournament.
Fifa has taken a tough stance against ambush marketing, taking Dutch brewery, Bavaria, to task after it allegedly orchestrated a campaign at the World Cup match between the Netherlands and Denmark on Monday. Two women have appeared in court on charges related to the SA Merchandise Marks Act.
Local Organising Committee (LOC) spokesman Rich Mkhondo would not be drawn on what the extra cost of deploying police officers at various stadiums would be after security guards downed tools over wages.
"There is a dispute between parties. Once we get involved in a public debate, the issues get escalated," Mkhondo said.
"We are trying to resolve all these issues...we are not going to do that publicly."
Five World Cup stadiums were hit by industrial action since the start of the tournament last Friday. Initially the strike involved only one service provider, Stallion Security, but guards from the Fidelity Security Company also entered the fray on Thursday.
Yesterday the Mail & Guardian reported that police were investigating claims that sabotage by rival security companies were at the root of the industrial action.
The M&G said it had established that the government would have to foot a bill of more than R100 million to pay the police officers. This expense was "supposedly" covered by Fifa and the LOC, the report said. - Sapa
This article was originally published on page 1 of The Independent on Saturday on June 19, 2010
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